TIDMEQLS
RNS Number : 8199T
Equals Group PLC
19 November 2019
19 November 2019
Equals Group plc
("Equals" or "the Group" or "the Company")
Acquisition of Casco Financial Services Limited ("Casco")
Transaction expands Equals' B2B Payments Services business
Equals Group PLC, the e-banking and international payments
group, is pleased to announce a further acquisition aligned to its
publicly stated expansion strategy. The Group has today acquired
the entire issued ordinary share capital of Casco Financial
Services Limited ("Casco"), a UK based payment services provider
(the "Acquistion"). The initial consideration for the Acquisition
is GBP1.725 million with a potential additional consideration of
GBP2.0 million, depending on future performance.
Casco overview
Casco, which is regulated by the FCA as an Authorised Payment
Institution (API), was established in 2010 and has historically
focused on the provision of international payments, primarily for
corporate clients.
Casco launched an additional product in 2017 - the provision of
infrastructure services to the international payments sector.
Through this Infrastructure Services platform, Casco offers a
white-label product enabling other FX and payments companies to
scale their businesses by utilising its technology, banking,
liquidity and compliance capabilities.
For the last 12 calendar months to 31 October 2019, Casco
generated unaudited revenue of GBP3.3 million, EBITDA of GBP0.3
million and profit before tax of GBP0.2 million. Post-acquisition,
Equals expects to extract cost synergies of GBP0.4 million per
annum. As at 31 October 2019, Casco had net assets of approximately
GBP0.3 million.
The Acquisition will result in: -
1. A straightforward transfer of Casco's client base of over
1,000 corporate customers to the International Payments Division of
Equals. Adding these clients and transaction volumes onto the
Equals platform will provide further revenues and economies of
scale for the Group, as well as substantial cross selling
opportunities.
2. Casco's Infrastructure Services Business, which represents a
new product and revenue stream for the Group, being rebranded as
"Equals Connect" operated under a separate subsidiary (the
"Subsidiary")
Strategic rationale
The Acquisition is in accordance with three of the Group's
stated strategies: to consolidate smaller, attractive market
participants, expand its product range and leverage its investment
into deeper payments connectivity.
As part of the payments connectivity strategy, since 2017 Equals
has been focusing on supply-chain rationalisation. This has meant
building out its platform to integrate deeper into payment networks
and provide "connectivity" which, in turn, vastly improves customer
experience (CX) and retention as well as yielding improved
economics for the Group. The most recent example of this is Equals'
direct connection to Faster Payments and Bank of England settlement
accounts.
Equals Connect will combine this investment in deep connectivity
with the Casco platform to accelerate the Group into the B2B
service provider industry.
The Board believes there is a substantial addressable market
within this subsector of payment services and sees significant
opportunities for well-positioned companies to capture market
share.
The Board also notes that Banco Santander recently paid GBP350
million for a 50.1% stake in direct competitor Ebury Partners UK
Limited, illustrating the growing value of this subsector.
Transaction details
The initial acquisition price of GBP1.725 million is being
satisfied using a combination of cash and shares.
The cash element of GBP1.406 million has been funded from the
Group's existing cash resources, which were augmented in September
2019 following completion of its GBP14.3 million fundraising
(before expenses).
The balance of GBP318,750 will be satisfied by the issue of
377,666 new ordinary shares of 1p each in the Company at an issue
price of 84.4 pence (based on a five day average) ("Consideration
Shares"). The Consideration Shares are subject to a two-year
lock-in period followed by an orderly market provision.
Two additional cash payments may be made over the next 2 years,
conditional upon the payments services business achieving certain
net revenue targets. Based on run-rate revenue and growth patterns,
these payments would be expected to be approximately GBP0.25
million per annum (and are capped at a maximum of GBP1 million per
annum).
The Company has applied for the Consideration Shares to be
admitted to trading on AIM ("Admission"). It is expected that
Admission will take place at 8.00 a.m. on 22 November 2019.
Following Admission, the Company will have 178,552,918 ordinary
shares of 1p each in issue admitted to trading on AIM. This figure,
178,522,918, may be used by Shareholders as the denominator for the
calculation by which they will determine if they are required to
notify their interest in, or a change to their interest in, the
Company under the Financial Conduct Authority's Disclosure Guidance
and Transparency Rules.
Concurrently with the Acquisition, Craig Granger, Kane Granger
and Jack Bryant, the current senior management team of Casco, have
joined the Equals Group as employees. These individuals will retain
an aggregate 48.19% economic interest in the Subsidiary entitling
them to 48.19% of any dividends paid by the Subsidiary to the Group
and/or 48.19% of any sale proceeds of the Subsidiary should it be
sold. Various protections have been put in place in respect of that
economic interest.
Ian Strafford-Taylor, Chief Executive Officer, commented: "We
have been planning to enter the Service Provision sector for some
time in order to leverage the Group's resources in a parallel
market, where all of the same attributes are required as our core
international payments division. This transaction enables us to
enter with a proven provider and penetrate this growing market at
pace. In addition, we are also acquiring an excellent international
payments team and over 1,000 clients, most of which corporate
clients, who will benefit from our existing proprietary technology
and excellent operations teams. I very much look forward to working
with Craig, Kane, Jack and the rest of the incoming team on further
expanding our services."
Craig Granger, Managing Director, Equals Connect, commented:
"After building Casco for nearly 10 years I am delighted that our
team and clients are now joining the Equals Group. With a shared
culture and attitude, and with Equals' significant resources behind
us, I am confident that our Service Provider offering will flourish
at an even faster rate."
This announcement contains inside information.
For more information, please contact:
Equals Group plc
Ian Strafford-Taylor, CEO +44 (0) 20 7778
Richard Cooper, Group CFO 9308
Cenkos Securities plc - Nominated
Advisor and Joint Broker
Max Hartley (Nomad)
Callum Davidson +44 (0) 20 7397
Nick Searle - Sales 8900
Canaccord Genuity Limited - Joint
Broker
Bobbie Hilliam
David Tyrrell +44 (0) 20 7523
Alex Aylen - Sales 8150
Yellow Jersey +44 (0) 7747 788
221
Charles Goodwin +44 (0) 7983 557
Annabel Atkins 851
About Equals
Equals is a leading challenger brand in banking and payments
that disintermediates the incumbent banks with a superior user
experience and low-cost operating model. Our business enables
personal and business customers to make easy, low-cost payments
both domestically and in a broad range of currencies and across a
range of products all via one integrated system. The Equals
platform facilitates payments either direct to Bank Accounts or at
35 million merchants and over 1 million ATM's in a broad range of
countries globally via Mobile apps, the Internet, SMS, wire
transfer and MasterCard/VISA debit cards.
Equals provides money movement services to both personal and
business customers through four channels: Currency Cards, Physical
Currency, International Payments and Bank Accounts. The Currency
Card and Physical Currency offerings facilitate multiple overseas
payments at points of sale and ATM's whereas the International
Payments channel supports wire transfer foreign exchange
transactions direct to Bank Accounts. For Corporates, Equals has a
market-leading business-expenses solution based around its
corporate platform and prepaid card. This service can yield
significant savings on a Corporate's expenses and procurement both
domestically and overseas, through better controls and improved
transparency. The platform also streamlines the downstream
administrative processes and integrates into accounting software,
thus saving costs. Equals offers retail and business bank accounts
with all the functionality you would expect from a bank, namely
faster payments, BACs, direct debits, international payments and a
debit card.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQFFSEEAFUSELF
(END) Dow Jones Newswires
November 19, 2019 02:00 ET (07:00 GMT)
Grafico Azioni Fairfx (LSE:FFX)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Fairfx (LSE:FFX)
Storico
Da Apr 2023 a Apr 2024